Testimony of

Cary Coglianese
Edward B. Shils Professor of Law
Director, Penn Program on Regulation
University of Pennsylvania Law School

Before the
City of Philadelphia Refinery Advisory Group
Environment Committee

August 27, 2019

Co-chairs Abernathy and Thiel, as well as other members of the Refinery Advisory
Group and other City officials present here this evening, I appreciate the opportunity to appear
before you to speak briefly about principles of regulatory excellence and their implications for
public officials contemplating the future of the Philadelphia Energy Solutions (PES) refinery site
and the thousands of jobs that have been connected with it.

By way of background, I am currently the Edward B. Shils Professor of Law and the
Director of the Penn Program on Regulation at the University of Pennsylvania.1 The focus of my
research and teaching for the last quarter century has been on government regulation, with a
particular substantive emphasis on environmental and health and safety regulation. Recently I
served on the National Academy of Sciences committee that released the report Designing Safety
Regulations for High-Hazard Industries,2 which I then subsequently briefed by invitation to
members of the U.S. Chemical Safety and Hazard Investigation Board. I currently chair the
Rulemaking Committee of the Administrative Conference of the United States, a federal agency
that develops recommendations for improving the work of administrative agencies. I am also the
chair of the Regulatory Policy Committee of the American Bar Association’s Section of
Administrative Law and Regulatory Policy. My most recent books include Regulatory
Breakdown: The Crisis of Confidence in U.S. Regulation and Achieving Regulatory Excellence.3

At the outset, I also wish to express my deep personal gratitude for the diligent and brave
workers at the PES facility, as well as all of the City’s many heroic first responders, who worked
on the scene to contain the refinery fire and explosion and prevent the loss of life. All of us who

1
I provide my current academic appointments and other affiliations in this testimony merely for the purpose of
identification. I am testifying here only in my individual capacity and not on behalf of the University of
Pennsylvania or any other organization with which I am affiliated.
2
NATIONAL ACADEMIES OF SCIENCES, ENGINEERING, AND MEDICINE, DESIGNING SAFETY REGULATIONS FOR HIGH-
HAZARD INDUSTRIES (2018), https://www.nap.edu/catalog/24907/designing-safety-regulations-for-high-hazard-
industries. For a brief summary of this report, see Cary Coglianese & Thomas R. Menzies, Designing Safety
Regulations for High-Hazard Industries, THE REGULATORY REVIEW (Oct. 4, 2017),
https://www.theregreview.org/2017/10/04/coglianese-menzies-safety-regulations-hazard-industries/.
3
A complete list of my publications can be found in my vita, available at www.law.upenn.edu/coglianese.

1
live or work in the City are extremely fortunate for their tireless efforts, often made at risk to
themselves, and for those of all the workers and officials who have subsequently been taking
steps to neutralize, monitor, and clean-up conditions in order to protect health and safety.

***

The Advisory Group, as with all of us in the public, understandably seeks to anticipate
what the future of the PES refinery will look like after the incident of June 21, 2019. Although
the exact future of the facility is impossible for me or anyone else to forecast at this time, it is
possible to describe with great confidence the general features that will be associated with that
future: complexity, uncertainty, dynamism, tradeoffs, and value choices.

Whatever the precise path ahead looks like, it will be populated with complexities and
uncertainties. If the refinery is reopened or repurposed for another chemical-processing
operation, it will continue to bring with it a low tolerance for the kind of catastrophic error that
characterizes any high-hazard industry, especially one located so proximate to a densely
populated city. If the site is redeveloped for other uses, the hazardous chemicals that remain in
the soil and groundwater will likely pose their own economic and environmental complexities as
the corrective action clean-up process continues. With any path forward, some of the
probabilities of the hazards will be capable of estimation, but others will not be—and even the
existence of some other hazards may be uncertain.

The world will not sit still while all of the complexities and uncertainties surrounding the
site can be resolved. Dynamism in market conditions over the last decade already have created
financial challenges besetting the privately owned and operated refinery.4 With further shifts in
the nation’s energy mix looming in the years to come, it might well be unrealistic to expect that
market conditions for any already struggling refinery operation will improve dramatically.
Furthermore, other changes in society and the economy will surely emerge—from new
technologies to new economic development patterns within Philadelphia—and these changes
will likely shape the path forward.

In the face of complexities, uncertainties, and changing conditions, one thing will be
certain: Decision-makers in both the private and public sectors will face inevitable tradeoffs and
the need to make value choices. How many people must lose their jobs to protect the interests of
shareholders and creditors? How much safety is enough safety for workers and community
members to demand? How clean is clean? These and other decisions will require making choices
implicating values such as efficiency, equity, and justice.

In this respect, as challenging and unclear as the future for the PES site may be, it will not
be entirely different from other challenges that government officials confront on a regular basis.
These features of complexity, uncertainty, dynamism, tradeoffs, and value choices pervade many
of the most significant policy issues in society—especially those surrounding government
regulation. Regulatory challenges arise because society enjoys benefits from many different
industrial activities—including refining—but also because society demands that such activities

4
See, e.g., Christina Simeone, Part 1: Philadelphia Energy Solutions Bankruptcy Basics, Kleinman Center for
Energy Policy (Feb. 2, 2018), https://kleinmanenergy.upenn.edu/paper/beyond-bankruptcy.

2
be conducted in a manner that responsibly manages the adverse risks imposed on workers and
the broader community. Regulating well requires balancing competing needs and interests in the
overarching service of public value.

At the Penn Program on Regulation, my colleagues and I study regulation across a range
of policy fields and across different parts of the world. About five years ago, I launched a major
research initiative focused on identifying the attributes of excellent regulation and developing a
framework for improving the quality of regulation. The initiative has involved dozens of
researchers from around the world as well as extensive engagement with regulators, regulated
entities, and those affected by regulation. Although the research initially began with a particular
focus on improving the quality of energy and environmental regulation, the framework that
emerged from this initiative offers guidance for the pursuit of regulatory excellence in any
setting and policy field.5

I mention this project because the nature of the challenge confronting regulators in many
domains mirrors in important respects the features of the challenge now confronting the City of
Philadelphia. As I wrote a couple of years ago in the first book to emerge from our Program’s
regulatory excellence initiative:

Regulators tend to face some of the most difficult challenges in society—ones that
often present value tradeoffs. These problems frequently involve complex
technological operations, social interactions, and new technologies—the very
sorts of problems about which there exists a great deal of uncertainty. Accident
avoidance, for example, is a common regulatory objective, but the sources of
accidents can be both legion and interactive, making it difficult to foresee every
pathway that might lead to accidents in systems with highly complex interactions
of many moving parts. Regulatory problems are almost by definition problems
that markets cannot solve. …. Furthermore, regulators must often operate under
changing conditions.6

In addition to the complex nature of the problems they confront, regulators operate in an
environment in which their success depends on the actions of others—if no one else, then the
private firms they regulate, but usually many others as well. As I have further written:

To an extent greater than most other professions or endeavors, a regulator’s

performance is ultimately affected by those who reside outside the regulatory
institution itself. It is dependent on a diverse and dynamic collection of other
individuals and entities: not just regulated entities, but also legislatures and
elected officials, regulatory beneficiaries and their representatives, advocacy
groups, and other interested segments of the public.7

5
Several dozen papers and reports from this project can be found online at:
https://www.law.upenn.edu/institutes/ppr/bestinclassregulator/.
6
Cary Coglianese, The Challenge of Regulatory Excellence, in ACHIEVING REGULATORY EXCELLENCE 6-8 (Cary
Coglianese, ed., 2017).
7
Id. at 7.

3
These multiple actors, and their frequently competing values and interests, add to the decision-
making and operational challenges confronting regulators and other public officials.

Although the public official’s challenges may be daunting in these circumstances, with a
considerable risk of conflict, disappointment, or failure, it is possible to identify best practices
and the contours of success. In the final report for the first phase our regulatory excellence
project, I identify the major tenets of regulatory excellence and offer checklists to consult in
seeking to advance the following three core aspirational principles of regulatory excellence:8

• “An excellent regulator consistently holds itself to the highest standards of integrity.”
• “An excellent regulatory engages empathically with all facets of society when making
decisions and exercising authority.”
• “An excellent regulator demonstrates consistently stellar competence by using its
available resources to maximize public value.”

These core principles of integrity, engagement, and competence provide a basis for the
development of metrics to guide the management of any regulatory or public policy problem.
They can serve as overall guideposts to the City of Philadelphia as it works with others on the
future of the PES refinery site.

Perhaps most relevant to the work of the Refinery Advisory Group, our initiative on
regulatory excellence offered evidence-based guidance for regulators seeking to improve their
regulatory performance. Emerging from the project were several comprehensive research papers
on issues such as risk analysis, regulatory instrument design, transparency, and public
participation—each informing a set of recommendations on how regulators ought to approach
priority-setting, problem-solving, external engagement, and performance evaluation. Drawing on
this research, I would like to offer key lessons in three main areas—coordination,
communication, and compassion—that the City may find helpful going forward.

Coordination. As the Advisory Group is aware, the City of Philadelphia is just one of
many organizations and entities that are studying the PES refinery site and whose work will
affect its future. First and foremost among these entities are those from the private sector. As
neither PES nor the refinery is owned by the City, the site’s future will depend on what plans
private banks, investors, and companies seek to pursue at the facility—whether rebuilding and
restarting the damaged facility, or pursuing other commercial or other uses of the land. Of
course, depending on what steps private sector firms wish to take, their ability to do so will be
influenced in various ways by the work of federal and state agencies that are investigating or
have regulatory authority over the site and its operation.

The City of Philadelphia does not control the work of these other entities or actors—but it
should try to coordinate with them. That coordination will take time and ongoing effort—
extending well beyond the limited timeframe of any temporary task force or advisory group—
because these various actors have their own internal processes and timetables for their work. For
example, the Chemical Safety Board (CSB) is currently investigating the root causes of the June
8
Cary Coglianese, Listening, Learning, and Leading: A Framework for Regulatory Excellence (2015),
https://www.law.upenn.edu/live/files/4946-pprfinalconvenersreportpdf.

4
incident. It might well be thought prudent by some to know more about those causes before
making determinative operational or regulatory decisions for the future. The interim head of the
CSB has reportedly indicated that a preliminary report on the incident could be issued in six to
nine months.9 But a final CSB report is another story altogether. A review of all of CSB’s
investigations over the last ten years indicates that it takes the Board an average of 2.5 years after
an incident to issue a final report.10

Similarly, another process is currently underway in bankruptcy court. The last time PES
declared bankruptcy, in 2018, it took only about eight months for the firm to clear through the
Chapter 11 process. That was shorter than the average of about 1.2 years that it takes companies
to go through the bankruptcy process.11 But it might not be surprising if PES’s current
bankruptcy proceeding extends beyond even this average duration for most firms. Unlike in the
typical Chapter 11 bankruptcy, where a lot of planning occurs before a company files for
bankruptcy, PES obviously had no opportunity to anticipate the explosion and could not engage
in such planning in advance of its most recent filing.

If PES or its investors should decide to sell the site and a buyer come along who wishes
the site to be redeveloped and used for other purposes, the current hazardous waste corrective
action work at the site, overseen by the U.S. Environmental Protection Agency with assistance
from the Pennsylvania Department of Environmental Protection, will hold its own implications
and need for coordination.12 Although remediation at the site has already been ongoing for years,
it could take still additional years before the site meets even its current cleanup target for
industrial use—and this will likely take longer still if the site is to be cleaned up to meet other
uses. By frame of reference, hazardous waste cleanups at other major industrial sites has not
infrequently taken decades to complete.13

In short, the timeframes of these other, related processes will affect the pace of future use
or development of the PES site. Future use or development of the site will involve multiple
actors at a pace that will be out of the City’s ultimate control. Coordination will be crucial among
the various federal, state, and local authorities involved, as well as current or future private firms
or developers interested in the site. At the end of the day, the value that the public receives in the
future from the PES site and its use will depend not on the decisions made by any single
organization, but through the joint efforts of many public and private organizations. The City
could play a valuable role in helping to support and coordinate these various efforts to ensure
that they move forward in as sound and efficient a manner as feasible.

9
Andrew Maykuth and Frank Kummer, Chief Investigator of the Philly Refinery Explosion Describes a Landscape
of Twisted Steel, PHILADELPHIA INQUIRER (June 27, 2019), https://www.inquirer.com/business/philadelphia-
refinery-fire-chemical-safety-board-csb-investigation-20190627.html.
10
I am grateful to my outstanding research assistant, Mary Ann McNulty, for compiling and analyzing this data for
me.
11
Foteini Teloni, Chapter 11 Duration, Preplanned Cases and Refiling Rates: An Empirical Analysis in the Post-
BAPCPA Era, 23 AMERICAN BANKRUPTCY INSTITUTE LAW REVIEW 571, 573, 582-83 (2015).
12
EPA, Hazardous Waste Cleanup: Philadelphia Energy Solutions Refining and Marketing LLC,
https://www.epa.gov/hwcorrectiveactionsites/hazardous-waste-cleanup-philadelphia-energy-solutions-refining-and-
marketing.
13
Martha L. Judy & Katherine N. Probst, Superfund at 30, 11 VERMONT JOURNAL OF ENVIRONMENTAL LAW 191,
242 (2009).

5
 Communication. Coordination between the various private and public sector entities
involved with the future of the site will obviously depend on effective communication taking
place between them. But just as vital will be continued communication with members of the
public who are affected by the incident and interested in the future of the PES site, including
labor groups, neighbors, civic associations, local businesses, and educational and nonprofit
institutions. In this regard, the City has an important responsibility not only to keep the public
informed of relevant plans or developments, but to involve the public actively to the greatest
extent feasible in the planning and development process. The establishment of this Refinery
Advisory Group, and the convening of public hearings such as this one, are excellent first steps.
As I have written elsewhere, “[a]ll things being equal, a greater number of opportunities for
engagement will be better than fewer opportunities, and earlier opportunities will be better than
later ones.”14

To be effective, communication with the public needs to be multifaceted and interactive.

Important communication will certainly take place by information being disseminated out to the
public from government and private sector firms. Transparency is critical. But communi-cation
also needs to flow in the reverse direction as well—as it is in this and the other hearings the
Advisory Group is convening. Some of the lessons from our research on regulatory excellence
apply to effective communicative interactions in the context of the City’s future involvement
with the PES site:15

• “As with personal relationships, listening is essential. Listening, of course, is not the
same as agreeing. The regulator needs to deliver public value, which means that it will at
times (perhaps even often) make decisions that are respectfully in tension with some
interests in society.”
• “[R]egulators have available to them a variety of different tools for soliciting public
input: public notices, comment periods, public hearings, informal meetings and phone
conversations, advisory committees, workshops, adjudicatory proceedings, negotiations,
and the Internet and social media. As with regulatory instruments, the excellent regulator
uses a variety of methods, adapting them to the purposes and circumstances at hand
(including the capacities and needs of interested or affected individuals and groups).”
• “For the public to be able to contribute meaningfully and intelligently during comment
periods, regulators should, whenever feasible, disclose a full, detailed draft of their
proposed actions. If time does not permit a regulator to allow for public comment on the
full draft, comments should be accepted after the action is taken so that any appropriate
amendments could be made or reasons could be given as to why changes are not made.”
• “Excellent regulators communicate clearly with the public about expectations. When
regulators undertake collaborative forms of engagement, they should be especially clear
about the goal of the engagement as well as what will happen if agreement cannot be
reached.”
• “Public engagement is not something that just takes place in formal hearings or via
comment periods. It occurs in every individual interaction between a regulatory employee

14
Coglianese, supra note 8, at 49.
15
The following passages are from Coglianese, supra note 8, at 49-51.

6
 and someone outside the regulatory organization, whether on the telephone, in a meeting,
or in an inspection encounter.”

Perhaps the most important takeaway for the City would be to think about communication as
conversational—as involving an ongoing, back-and-forth dialogue with all interested and
affected segments of the public.

An important feature of this conversational process, one which unfortunately too many
regulators and other public officials overlook, is to demonstrate to members of the public that
they have been heard. Their voices do matter, as they provide valuable information and guidance
on value choices that inevitably must be made. As a result, in addition to convening hearings and
taking input, this Advisory Group and City officials would follow best practices by reporting
back to the public on what they heard at these hearings and any other public engagement
sessions. This is an ongoing responsibility, especially given the likelihood of a prolonged process
ahead for the PES site. City officials will do well by their constituents to explain, whenever
relevant proposals or plans are developed or decisions are made, how what they have heard may
have (or may have not) affected choices that have been made. The public deserves to know that
their concerns have been heard and to be provided with reasons for key decisions that affect
them.

Compassion. Lastly, it will always be vital to remember how much is at stake for those
who live and work in Philadelphia. The establishment of this Advisory Group already
demonstrates that City officials appreciate how much this site matters. In such an understandably
significant, and stressful, circumstance, public officials at all levels of government will need to
respond with respect and compassion for those whose lives will be directly affected by the future
of the refinery site. Some of these impacts have already been felt. They have been felt most
recently by all of the PES employees who are now out of work, and by their families. So too
have these impacts been felt by those who have been exposed to pollution in the past from the
site, or who live with the risks of other future catastrophic incidents like the one that occurred in
June. The risks, benefits, harms, and opportunities that will come in the future from the PES site
will clearly depend on what use is made of it—but unquestionably those in Philadelphia will be
affected for decades to come.

***

In closing, let me applaud the work that the Refinery Advisory Group is undertaking on
behalf of all Philadelphians. You are performing an important role in helping with the
coordination, communication, and compassion that will be so vital to deliver public value
through excellence in regulation and public service. Your role and responsibility in this respect is
one that obviously will need to be shared by all City officials, as well as their counterparts
working at the levels of federal and state government. Ultimately, the road ahead is not an easy
one. But by government officials seeking excellence in the service of the public, Philadelphia can
best hope to unlock the fullest potential that the PES site holds for the future.